Wednesday, February 29, 2012

What is Money?

Some of the more academic chatterbox parts of the intertubes have been abuzz over Peter Graeber's 2011 book "Debt: The First 5,000 Years". I'm still waiting for this book to be returned to the library, so I can read it, but since everyone is talking about it now, the spoilers are out.

And the main gist I will take from John Quiggin's rumination about money. I enjoy Quiggin. Don't always understand him, but I enjoy him. My comment might flummox him some, as one of his goals is to make things understandable.

In any case, here's what I gather from what he gathers about the book:

"Graeber shows, convincingly enough for me, that the story conventionally
told by economists, in which money emerges as a replacement for barter
systems, is nonsense. In fact, as he notes this point has been made by
anthropologists many times and ignored just as often. Thanks to the
marvels of auto-googling, I’ve been aware for some time that my
namesake, Alison Hingston Quiggin gave the definitive demonstration long
ago in her ‘Survey of Primitive Money’. Graeber sharpens the point by
arguing that the real source of money is as a way of specifying debts".

So, the usual definition of money as a medium of exchange, an abstracted symbol representing an exchange of material goods or commodities, is wrong. Instead, since money was, according to Graeber, created to keep track of irredeemable debt between entities both solitary and aggregated, per Quiggin:

"From now on, we can treat money primarily as a store of value, and stop worrying about how it works as a medium of exchange".

I'll get back to why I emboldened and italicized that phrase in a moment. In another region of the intertubes, one in which many, many people were asked and answered the question "What is money?", I answered with the following:

"Money is what I shall gladly do for you on Tuesday, for a hamburger today."

Meaning, of course, that I already recognize the debt portion that Graeber wants to talk about, and also the irredeemable portion as well. That's the whole frickin' point of debt, it is a promissory transaction.

For, anyone who knows the tale of Wimpy, Tuesday will never come. Let's be clear though. This is not to Wimpy gets a free lunch. He sometimes does. Sometimes he doesn't. But when he does gladly pay on Tuesday, the payment he makes for the value of the hamburger will always be less than the hamburger. What is meant is that, in all transactions, there is always an inequity. Forget all changes wrought through the internal contradictions of capitalism, the psychological warfare of mercantilism, the other weird tribal customs and superstitions surrounding social orders, the fact is, through physical scarcity or plenty, through chance and contingency, through entropy at the very least, the winding down of the universal clock itself, the value of an object, from moment to moment, will never, ever be the same.

(To throw in a dig at the ridiculous libertarians: The whole egalitarian and idealistic notion that libertarians espouse "No force or fraud" is physically impossible. Barter is, by its very nature, inequity. Profit is just another name for "force and fraud").

Getting back to that emboldened italicized phrase. Value is not classical physics. It contains no clock parts. It is not a Newtonian transaction. It cannot be connected by strings and wooden rods. The value of something is neither continuous nor continuously changing.

Consider: right at this very moment, I hold a lump of gold in my hand. I do.

It is a knuckle bone sized lump that I took out of the jewelry instructor's cabinet. (I do this from time to time, because I like the feel and heft of it, and then I put it back). This lump of inert material, probably microscopically changing as little atoms rub off onto my skin, and perhaps the occasional radioactive decay turns a rare atom of gold into iridium, but still and all it sits pretty much the same lump from human-sized moment to moment. And yet the value of the gold lump is jittering and chittering up and down and sideways like a crazy wavicle with each quote on the spot market, and nowadays, with computers, at lightning speed.

Value is spooky action at a distance. Value is quantum entanglement. Value is an absolute value of an amplitude representing a probability. And money? Nothing more than the decohrence of an entangled state.

About Me

The term "random walk" is attributed to Karl Pearson, through a 1905 letter exchange in the journal Nature. It describes the path of a hypothetical drunkard. Since I hardly ever drink, I suppose that description fits me as well as any other. Other than that, I'm a well-muscled, good-looking, middle-aged, no-nonsense Northern Barbarian type that would just as soon put you to work as say "Hello" to you. So, Hello there! Now get back to work!